Mr Danko Konchar CEO & chairman of Kermas, the parent company of Samancor, has commented on an outlook for the ferrochrome market, particularly that in 2009.

Mr Konchar in an interview said that that Samancor Chrome having a capacity to produce 1,350,000 tonnes per annum of ferrochrome is scheduled to operate by 50% to 60% of this capacity in the first half of 2009.

The contents of his comments on ferrochrome are summarized as follows

1. Samancor Chrome is now operating only 6 electric furnaces out of 15, which is less than 40% of its total capacity. It is the producer of only ferrochrome and accordingly the reduced production of stainless steel has put a substantial impact on its production of ferrochrome in comparison with other companies producing various ferroalloys but, as a countermeasure to avoid unnecessary consumption of fund.

2. With regard to forecast of stainless steel production in 2009, he forecasts 27.26 million tonnes in 2009 a decline of 4.5% from that in 2008. Namely, the world production of stainless steel in 2009 will decrease by some 1.3 million tonnes compared with that in 2008. The decrease in stainless steel production means loss of about 500,000 tonnes of ferrochrome need.

3. Samancor Chrome has the capacity to produce 1,350,000 tonnes per annum of ferrochrome but is scheduled to operate at 50 to 60% of this capacity in the first half of 2009. On the basis of this operation, Samancor Chrome will produce approximately 350,000 tonnes of charge chrome for the first half of 2009 but this output includes about 510,000 tonnes for both of IC 3 and material for production of low carbon ferrochrome and consequently, the net quantity of charge chrome to be sold by Samancor Chrome in the first 6 months of 2009 is estimated to be some 300,000 tonnes.

4. The discussion on regulating exports of South African chrome ore is not progressing. Under the current economic circumstances, the business to export chrome ore from South Africa to China has turned to be much less attractive because of excessive stocks of chrome ore in China. Also, prior to general election in South Africa in 2009, the political situation in the country has entered into a busy season, causing slow development of the legislative move.

5. In April, 2008 there was an anxiety for the worldwide shortage of ferrochrome arose in the market. However, under the present situation after having passed half a year things have totally changed and every FeCr producer in the country does not need so much power.

6. The circumstances surrounding ferrochrome are deteriorating rapidly, and in a very wide scale in order to cope with a global recession of economy, the industry must quickly promote matters of large scale production curtailment, trimming of in competitive capacities, de stocking the current huge stockpile, and so on.
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